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Trust funds often are thought of as tools used by the uber-wealthy to keep their children in line. However, many people can use trust funds to ensure that their families will be cared for, and their wishes followed, after their death. A trust fund takes effort to set up and maintain, and the decision of picking a trustee needs to be made carefully. Still, that effort and expense will be rewarded with peace of mind later on.

The Trustee

Each trust fund must have a trustee, the person responsible for making decisions about trust assets with the best interests of the beneficiaries of the trust in mind. The trustee can be you if you establish the trust, or it's often a family member such as a sibling, parent, son or daughter. This is particularly the case with trustees designed to distribute assets after your death. Trustees also can be banks or attorneys. These trustees are usually emotionally detached from all of the players in a trust fund, allowing them to make decisions based more on sound business practices than on the desires of the beneficiaries. The trustee is charged with carrying out the wishes of the person who created the trust, as defined in the trust documents.

Handling Assets

A trust fund handles assets for the benefit of a trustee in the future. Often, this refers to investment assets such as stocks, bonds, mutual funds and bank accounts. But trusts also can manage and control real estate or even a business. These assets not only are controlled by the trust, they're owned by the trust fund, which is its own legal entity.

Inheritance Device

A trust is often used to distribute a large estate to beneficiaries who are too young to handle the money wisely, or who are can't legally inherit because they are minors. When you create a trust, you can determine the types of payouts that a beneficiary will receive. For minor children, trustees typically define a certain amount of money per month to be paid to the people you choose to take care of your children, for their care. You also may dictate that money be paid to these caretakers for their efforts. You can direct that the balance be paid directly to your children once they reach 18. But most people structure the payments to be made later, when your offspring are more mature and more capable of handling the money.

Charitable Giving

A trust is also available to assist with charitable giving. You can place assets in a trust, which designates that you receive interest payments on the money while you're still alive. When you die, the charity of your choice receives the balance of the trust. You can even designate that the balance be used for certain purposes, such as remodeling a building or establishing a new department. This is a way for you to build a legacy that lives on after your death.

Establishing a Trust

A trust is a complicated legal document, creating something that is usually intended to live longer than you will. For that reason, good legal advice is strongly suggested when setting up a trust. A simple error in language on the trust documents can void part or all of the trust, meaning that your wishes wouldn't carried out and your loved ones might not receive enough money to pay their living expenses. The cost to set up a trust can run from $1,600 to $3,000, or possibly more depending on how complex the trust is.

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About the Author

Craig Woodman began writing professionally in 2007. Woodman's articles have been published in "Professional Distributor" magazine and in various online publications. He has written extensively on automotive issues, business, personal finance and recreational vehicles. Woodman is pursuing a Bachelor of Science in finance through online education.

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